15 January 2005	Saturday	04 Zilhaj 1425

KARACHI, Jan 14: The National Electric Power Regulatory Authority has approved the tariff proposed by the Defence Housing Authority Cogeneration Ltd for sale of power to the Karachi Electric Supply Corporation.

Nepra held a public hearing for the determination of generation tariff in Islamabad on Dec 8, 2004, eliciting howls of protest from stakeholders who took exception to the venue of the hearing for a Karachi-based power plant.

Defence Housing Authority Cogeneration Ltd is a locally incorporated specific-purpose company which will set up a 94 mega-watt combined cycle power generation plant along with a three-million-gallon-per-day desalination plant in Karachi.

The primary source of fuel for the project is natural gas. The electricity generated will be sold to the KESC. The water purified by the desalination unit will be sold to the Clifton Cantonment Board. DCL's principal sponsors include M/s Pakistan Defence Housing Society and M/s Sacoden Investments Ltd, Singapore.

In a document detailing the points raised by interveners as well as arguments advanced by the DCL, Nepra says: "The Authority is, therefore, convinced that the proposed KESC-DCL contract is a step in the right direction to avoid disruption of service to consumers of KESC, that KESC has carried out due diligence in procuring power from DCL at the least cost under the given circumstances and further that the consumer end tariff would not be adversely affected with the proposed induction.

As such, the proposed contract is in the interest of the consumers as well as the public at large." Nepra says it is aware that following the KESC's privatization, its buyer might be adversely affected by the terms of the agreement.

"The Authority is aware of the fact that GOP intends to shortly put up KESC for sale as part of its privatization endeavour. The decision of the KESC to procure power through long-term contracts may lock in decisions for privatized KESC, which the new owner, in retrospect may not consider as the best and least cost option available. This matter was referred to the Privatization Commission for comments.

The PC in its response has informed that in view of the imminent shortage of generation capacity faced by the KESC, the process of procurement of generation capacity of the KESC cannot be held up for the privatization of the KESC to take place.

"The PC has expressed its concurrence to the proposed contract for power between the DCL and the KESC. The Authority agrees that it would not be prudent to delay the procurement of additional generation capacity till privatization at the risk of creating a shortage which may adversely affect the interest of the consumers as well as the service provider."